Will Africa be the fertile ground for Facebook’s Libracoin?
The world was introduced to the news on Tuesday the 18th of June that Libracoin, Facebook’s new cryptocurrency, will be launched in 2020. Calibra is the digital wallet that will store the Libracoin, and thus allow for transacting in the new cryptocurrency by the world’s 1.7 billion who are currently unbanked.
TechCrunch reported that Calibra will not be available in markets that have banned cryptocurrency – such as India, and in those markets where Facebook does not have presence, including China and North Korea.
How is Libracoin going to fair in Africa?
On the one hand, according to the World Bank Global Findex 2017 report, 3 out 5 Sub-Saharan Africans do not have a bank account. This lead to the thriving of mobile payment solutions, and explains the phenomenal success of Kenya’s M-Pesa that was launched in 2007 and is responsible for processing of 50% of the country’s GDP! Worth noting is that the rate of new smart phone acquisitions in Sub-Saharan Africa is higher than the rate of opening new bank accounts.
On the other hand, volumes of money that is transferred into the continent by African migrants are huge. According to Toby Shapshack, Nigeria and Egypt are ranked 5th and 6th respectively in the world’s top 6 recipients! Toby also states in his Forbes article that Sub-Saharan Africa has been found to be the most expensive place to send money to, at fees that average 9.4% 🤨
#DidYouKnow: remittance contribution to GDP is sizable in some African countries, including Liberia (27%), The Gambia (21%), and Comoros (21%).
Are there headwinds ahead for Libracoin in Africa?
I mentioned at the beginning of this blog that cryptocurrency is banned in some countries around the globe.
Are there African countries where this form of currency is illegal?
Before I answer the question, let me share quick stats on Facebook’s presence on the continent.
Top 20 African countries by active Facebook users
Here are the top 20 African nations on Facebook by number of active users:
eNitiate has been tracking the growth of Facebook in Africa since 2016, using Internet World Stats and Facebook Ads Manager as sources.
As the graph above shows, Facebook grew by 28% in Africa in the last 3 years. 1.5 in 10 Africans are active users of the platform. Cumulatively, there are 171.5 million active Facebook users in the top 20 countries, making up 90% of the continent’s total.
African countries where cryptocurrency is illegal
Most African countries do not have regulations for this form of currency (yet), including South Africa – the continent’s number one Bitcoin trading nation.
However, there are African countries where cryptocurrency is illegal, and these are Egypt, Algeria and Morocco. Take note that the 3 countries – all found in the North Africa Region – are 1, 3 and 5 respectively in the top 20 African countries on Facebook. 2 in 5 active Facebook users on the continent come from these 3 countries 🤔
Should this be of concern to Facebook? Let us explore.
Will WhatsApp be the saving grace for Libracoin in Africa then?
Given that Calibra is going to be available on this messenger app as well, it follows that availability of Libracoin will not be restricted to Facebook only.
In my last blog post, I shared stats that show WhatsApp is bigger than Facebook in South Africa. Well, this happens to be the case also for Nigeria, Ghana and Kenya, the countries where cryptocurrency is not regulated (yet).
Source of the stats in th graph above: Digital Report 2019
However, what you will notice in the graph above is that users between Facebook and WhatsApp in the countries for which stats are available do not differ massively.
It appears that WhatsApp is not going to make up for the loss that Libracoin will suffer due to unavailability to 40% of Facebook users in Africa.
RELATED POST: WhatsApp usage is bigger than Facebook in South Africa
Usage of Libracoin is going to be affected by the non-participation of the 3 North African countries where cryptocurrency is illegal given their high contribution to active Facebook user numbers, unless laws of such countries are changed as this tsunami becomes unstoppable.
I do also foresee that Facebook’s current privacy woes are going to cajole many countries, including in Africa, to regulate the cryptocurrency market or risk economic catastrophies.